In Peacock Stores v Peregrine, Norman & Matthews the EAT had to consider whether a tribunal had been entitled to find that three former employees were contractually entitled to enhanced redundancy payments when, throughout the period of their employment, contractual redundancy procedures were in place, but there was no written provision stating whether a redundancy payment was to be restricted to the statutory scheme or enhanced in some other way.
The evidence before an Employment Judge (EJ) showed that the consistent practice in a number of redundancies between the 1980s and 2002 had been to make redundancy payments based on statutory terms but without a cap on either years of service or the amount of a weekly wage, and there was some generalised evidence as to the same position between 2002 and 2006. The evidence as to the position between 2006 and 2012 (when the redundancies giving rise to the claims arose) was not so clear cut, and could be said to show an inconsistency of practice.
The test which the EJ had to apply was set out by the Court of Appeal in Park Cakes Ltd v Shumba and others, i.e. whether an employer has, objectively viewed, so conducted himself by word or deed that it is to be inferred that a term has been agreed between the parties. The EJ held that a contractual term that redundancy payments would be made without either cap could be inferred because by 2006 he thought the term to be agreed and nothing since then showed that that term had lawfully been varied. The EAT agreed with the EJ’s conclusions. The EJ had been entitled to find that a term giving the right to enhanced payments was to be inferred, there were no circumstances from which the EJ could properly infer that what had been agreed had been superseded and therefore a departure from that term would represent a breach, unless it was varied by agreement.
The EAT’s decision highlights that if enhanced redundancy pay is to be discretionary, then that should be made absolutely clear, but even then remembering that where a specific decision is made on each occasion, this is only relevant to the extent that viewed objectively an employee would appreciate that this is the employer's approach.
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